$100M Vape Industry Tax

Posted 12th March 2019 by Dave Cross

U.S. President Trump has announced his intention to place an anti-business tax on the vape industry. Companies would be expected to stump up $100 million a year in “user fees” that would be used for “federal oversight”. It forms part of his budget proposal, released yesterday.

The beneficiary of this levy would be the Food and Drug Administration (FDA), which currently benefits from $712 million in user fees (largely from tobacco cigarettes).

Vapers hoping Scott Gottlieb’s resignation from the FDA would trigger a warmer pro-business stance from central government. This action is clear indication that the intention is to continue to press harder against tobacco harm reduction – especially as justification for the payments is to combat the ‘teen epidemic’.

The budget request, titled A Budget for a Better America: Promises Kept, Taxpayers First, states: “The proposal supports FDA’s goal to prevent a new generation of children from becoming addicted to nicotine through e-cigarettes.”

No Republican Senators have announced their support for this anti-business measure. In fact, Rosa DeLauro stated it would be “a cold day in hell before I helped pass a budget like this.”

This contrasts with some of Trump’s opponents on the other side of the House. Democrat Senator Jeanne Shaheen is quoted as praising Trump’s move: "I’m glad the Trump administration is weighing-in and making it clear that it’s past time to tackle the crisis of youth e-cigarette use. I hope to work with the administration as I rally bipartisan support for my legislation in Congress."

Vapers United is a non-profit advocacy organisation that analyses efforts at the state, local and federal level to tax and over-regulate vaping and manufacturers, and helps to fund lawsuits targeting anti-vaping laws.

Liz Mair, a strategist for the organisation, said: “This is a tax, not a ‘user fee’. ‘User fee’ is lingo that Republicans and conservative Democrats use when they’re about to hike taxes but don’t want to admit that’s what they’re doing.”

The good news for vapers is that Presidential budgets have almost no chance of being passed intact and tend to form part of the opening point for negotiations with Congress.

Democrat Chuck Schumer said: “The Trump administration’s latest budget proposal is a gut-punch to the American middle class and a handout to the wealthiest few and powerful special interests that would worsen income inequality. Its proposed cuts to Medicare, Medicaid and social security, as well as numerous other middle-class programs, are devastating, but not surprising.”

Will this prove to be built-in virtue signalling that can then be blamed on the Democrats when it doesn’t come to fruition? Time will tell.